A consistent failure to achieve profitability has led most investors to ditch the stock of Canadian pot producer Aurora Cannabis (NYSE:ACB) in 2020. Year to date, the stock is down over 68%. The benchmark Horizons Marijuana Life Sciences ETF is down just 15% in that time.
The company’s second-quarter 2021 earnings release arguably contained several negative developments that disappointed investors. But I think Aurora’s future a year from now could be brighter than today’s financials may suggest. Let’s look at why taking a small stake in Aurora now could pay off in the medium term.
Another lackluster quarter
During the first quarter of 2021, Aurora’s net revenue decreased to $67.8 million Canadian dollars from CA$75.2 million in Q1 2020. The company managed to sell 16,139 kilograms of cannabis during the quarter, an increase from the 12,463 kg it sold in Q1 2020. Unfortunately, Aurora was not able to profit from this increase — over the past year, the price of dried cannabis sold by the Canadian producer fell sharply from CA$5.68 per gram to CA$3.70 per gram because of excessive supply from sector players.
Investors who were expecting better news may well be disappointed. On an annualized basis, Aurora is selling about 64,500 kg of dried cannabis, which is far below the 187,500 kg of dried cannabis